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Four Seasons Reponds to "Inflammatory Rhetoric"

May 14, 2009 By: Travel Agent Central Contributor


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The battle of released statements continues between Four Seasons Hotels and Resorts and the owner of the Four Seasons Aviar, which reportedly plans to switch operators of the San Diego property.

Yesterday, the law firm Bickel & Brewer, attorneys for the owners of the former Four Seasons Aviara, stated that Four Seasons faces trespassing charges because it refuses to leave the property and that it was notified last week that Dolce Hotels and Resorts would assume management of the resort property.

Today, Four Seasons responded with the following statement, which speaks for itself: 

Four Seasons Hotels and Resorts is compelled to refute the false and inflammatory rhetoric being disseminated by lawyers for Broadreach Capital Partners/Maritz, Wolff & Co., the Owners of Four Seasons Resort Aviara, in conjunction with their improper attempt to take control of the Resort from its contractual managers, Four Seasons.

The Owners and their counsel have been engaging in a misleading media campaign to defame Four Seasons while simultaneously attempting to circumvent the legal system and usurp the arbitration process agreed upon by both parties. Their statements and actions have deliberately and unnecessarily placed the employees of the Resort at the centre of the dispute.

The focus of Four Seasons is ensuring the well-being of its employees, preserving the experience of its guests and enhancing and protecting the profitability and long-term value of the Resort. Four Seasons continues to manage the Resort and is operating and welcoming guests as usual. The company is confident that ultimately the facts will show that the Owners have acted imprudently and outside of their legal and binding agreements, and that Four Seasons will prevail.

The facts of the situation are as follows:

Owners’ Obligation to Fund Operations and Debt Service Problem

As illogical as it may sound, the Owners have threatened to stop funding operations, including salary payments to employees, yet expect to continue to collect and hold revenues from ongoing operations. Under the management agreement, the Owners are obligated to fund all required working capital, including debt service payments.

The Resort is profitable at an operating level, even in this tough economic climate. However, the Owners refinanced the asset in 2006, significantly increasing the debt service and making it impossible for the Resort to service its debt level in the current economic downturn. Put simply, they borrowed more money than the Resort can now service. Broadreach Capital Partners and Maritz, Wolff & Co. are unwilling to take the necessary steps to meet their financial obligations, and Four Seasons will do everything possible to ensure that the Owners live up to these obligations.

Management Agreement Requires Arbitration

Under the terms of the existing contract with the Owners, Four Seasons has the legal right to manage Four Seasons Resort Aviara until 2087. The management agreement requires that any and all disputes that arise be handled through arbitration. Four Seasons has fully complied with the Owners’ original request to take the dispute to arbitration, and will respect and honour its contractual obligations and the arbitration process.

Four Seasons will remain the manager of the property unless, and until, the arbitration process determines differently. Thus, statements made by the Owners’ lawyers that Four Seasons has been terminated and is trespassing are categorically untrue.

Four Seasons Resort Aviara Continues to Outperform Competitors

Contrary to what Owners’ counsel have been quoted as saying, claims by the Owners that installing another operator will improve occupancy, patronage and performance are demonstrably false. Despite very challenging current economic conditions, the Resort continues to outperform its competitors. Four Seasons Resort Aviara participates in a monthly competitive evaluation carried out by a highly regarded independent research firm, Smith Travel Research, which specialises in the travel and hospitality industry and is widely used by all major hospitality companies to benchmark performance. The firm gathers the relevant statistics and ranks the Resort against several comparable regional competitors on a monthly basis.

Smith Travel Research data shows that for the 12 months preceding March 2009, Four Seasons Resort Aviara performed significantly better than its competitors. The Resort’s occupancy exceeded the competitive set by almost 10% over the past 12 months and by 21.4% in the past quarter. In addition, the Resort’s RevPAR margin (i.e., revenue per available room – a standard industry measure of performance) is 20.8% greater over the past 12 months and is 33.7% greater than its competitors in the first quarter of 2009.

This dispute is not about financial mismanagement, but rather about the Owners’ attempt to piggyback on the strong reputation of Four Seasons by taking over the successful Resort and turning it over to Dolce Hotels and Resorts, a company that is owned and controlled by the Owner Broadreach Capital Partners.

Accusations of Threatened Breach of Peace

Owners’ claims that Four Seasons threatened a “breach of peace” by resisting the physical takeover by Owners on May 11 are absolutely false. In response to the Owners’ widely published threats to storm the Resort and forcefully take over control of operations, Four Seasons enhanced check-in procedures and security to ensure the guest experience would not be interrupted. Four Seasons had every reason to believe that the Owners would act in an intimidating manner. On March 28, 2009, at 1:00 am, Owners’ representatives, accompanied by a cadre of security, conducted a physical invasion at the Resort, changing the locks of private management offices and intimidating Resort employees. These previous and proposed actions led Four Seasons to seek a Temporary Restraining Order in San Diego Federal Court, and the Court has set a date to hear the matter on May 27. Notices to the Owners to appear in court were ignored, and the Owners’ counsel chose to file a counterclaim later that same day. The only threat to breaching the peace is the continuing threat of the Owner to take over the Resort.

Four Seasons has managed the Resort since 1997. In that time, the Resort has garnered numerous awards and accolades, including being named to
Forbes Traveler’s list of the World’s Top 400 Hotels; named as a AAA Five Diamond Award for eight years running; listed as one of ZAGAT’s Top 50 U.S. Resorts for 2008; and listed on Condé Nast Traveller’s “Gold List” from 1999 to 2009.


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